The pound is down for a third consecutive day in a row in today’s trading as another round of disappointing data raised doubts over expectations that the Bank of England would raise interest rates in the nearest future.
The British currency is now down over US1c after the latest Markit's purchasing managers index (PMI) released earlier today slumped to 53.4 in June against analysts’ expectations for a figure of 53.5 and also lower than the figure recorded last month of 53.8
This follows on from disappointing construction PMI figures out yesterday as well as less than manufacturing data earlier in the week.
The news is bound to cause a headache for BOE governor Mark Carney who appeared to last week, begin preparing the market for an interest rate hike by noting that the central bank may soon begin removing their economic stimulus plan.
With an interest rate hike off the table, for the time being the pound may be in for further losses and especially if any more poor economic data hits the market.
Chris Williamson, chief business economist at IHS Markit, said:
A slowing in services sector growth completes a triple-whammy of disappointing PMI survey readings. Although the three PMI surveys are running at levels that are historically consistent with GDP growing by around 0.4 per cent in the second quarter, it’s clear that the economy heads into the third quarter losing momentum.
He added:
With business optimism having been hit by the intensification of political uncertainty following the general election and commencement of Brexit negotiations, at the same time that households are battling against rising inflation, the indications are that the economy’s resilience is being tested.
Industrial production and manufacturing figures due out of the UK on Friday will be closely watched by investors and unless there is a rebound the pound looks to be headed for trouble.